Open Collective Launches New Way to Support Open Source through Public Stock Shares
It’s no secret that companies are making loads of cash using open source technology. A 2021 survey of 1,250 IT leaders commissioned by Red Hat found that 90% are using enterprise open source software. Following the trail of major acquisitions (Red Hat at $34B, GitHub at $7.5B, and MuleSoft $6.5B), it’s becoming more common to see companies built on open source valued at billions of dollars.
With so much invested in open source infrastructure, many companies will assign employees to work on specific important issues for the projects they depend on, or hire them to support these projects full-time. This is an effective way to support maintainers when it works out but sometimes projects need to be able to funnel support to those who can further the software but who don’t happen to work for one of these corporations.
Open Collective is exploring a new way for individuals and companies to give back to the projects they use by donating public stock. The new initiative is called Open Stocks. It allows donors to support open source without having to pay capital gains tax on the appreciated amount of their stocks, which is up to 37% for those based in the US. They receive a tax write-off at the current market value of the stock. Donating some of those profits is one way to lessen the tax burden for capital gains while keeping the open source software alive that made the public stock possible in the first place.
Open Stocks is using Overflow, a VC-backed philanthropy platform, to streamline the stock donation process, which may have the potential to increase the average donation amount for open source projects. The startup claims “the average stock donation through Overflow is 47X the average online ACH/debit/credit donation.”
Here is how it works: Donors select the open source collective they want to support and then proceed to the checkout process, which happens on the Overflow website app. Donors are asked to connect directly to their brokerage account by authenticating through the app. The Open Source Collective team will receive the donated stock converted to cash and the cash is then transferred automatically to the specified project’s balance with a public contribution notice on their page.
It is not very clear up front for donors what fees they will have deducted from their total donation. Open Collective did not publish this information, and it wasn’t available on the Overflow website. Open Collective co-founders were not immediately available for comment on this.
All currently-registered collectives are automatically able to receive stock donations. The announcement hints at future support for non-traditional forms of payment:
Stocks and shares are a huge part of the economic power of traditional geopolitical structures, and while we believe that equivalent access to those structures is a positive move for the communities we support we can’t ignore that the world is changing… how we embrace and organize around that change may have an even bigger impact on our work.
Open Collective co-founder Pia Mancini confirmed on Twitter that donation via cryptocurrencies is next on deck for the organization in its efforts to support open source creators.